Pipe and tube overcapacity isn’t on the way—it’s here, buyers assert

Jun 30, 2011 | 07:00 PM | Michael Cowden

Tags  OCTG, U.S. Steel Corp., Vallourec SA, Nafta, Tenaris SA, Michael Cowden

Don’t ask some oil country tubular goods (OCTG) buyers about whether there is looming overcapacity in North America; it’s already here, they believe.

Sentiment ranges from optimism about the potential for shale play business and a pickup in offshore activity to downright bearishness among some traders and distributors.

"Effectively, the North American market, including Mexico, is totally self-sufficient," one trader said. "You can get anything you want from the mills on short notice. Anyone that says different is dreaming."

That’s left some traders who don’t like to carry inventory holding thousands of tons that they don’t want, he said. "You have almost 2,000 rigs running. The phones should be ringing off the hook. People should be desperate. But right now prices are falling."....

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